New Jersey and Washington Enact Tough Pay Equity Laws

Washington and New Jersey have passed comprehensive pay equity laws that significantly strengthen requirements for employers to provide equal pay for similar employment without regard to gender or other protected characteristics. They join other states in enacting far-reaching legislation to combat pay inequality, such as California, Maryland, New York and, most recently, Massachusetts, which has expanded its existing pay equity law, effective July 1, 2018.

Like the federal Equal Pay Act and other states' equal pay laws, New Jersey's and Washington's laws include some legally permissible bona fide reasons for paying a different rate of compensation, including pay differences that are based on a seniority or merit system. Both new laws also prohibit an employer from retaliating against an employee for exercising his or her rights under the law.

Washington Equal Pay Act

The new Washington law is a substantial revision of the state's Equal Pay Act, which had not been modified since 1943. The revisions aim to "address income disparities, employer discrimination, and retaliation practices, and to reflect the equal status of all workers in Washington state." Effective June 7, 2018, the new law makes it a misdemeanor for an employer to discriminate in providing compensation based on the gender of similarly employed employees.

The new law defines similarly employed to mean jobs with the same employer that require similar skill, effort, and responsibility performed under similar working conditions. Further, by replacing the term sex with gender, the new law also extends equal pay protections to LGBT employees.

In addition, the new law provides that an employer may not limit or deprive (as those terms are defined in the law) an employee of advancement opportunities on the basis of gender. And, although an employer is not liable for an isolated incident of a lost advancement opportunity, it may be liable if it has engaged in a pattern of violations in regard to the employee or committed a violation through application of a formal or informal employer policy or practice.

Although the new Washington law permits differences in pay based on bona fide job-related factors, salary history is not a defense to a claim of inequitable pay. However, setting a pay level based, even in part, on an applicant's salary history will leave an employer vulnerable to a claim of inequitable pay.

The revised law also includes a provision to increase pay transparency. An employer may not require an employee to sign a non-disclosure or waiver agreement that prevents the employee from disclosing his or her pay. An employer is also prohibited from retaliating against an employee who asks about, discloses or discusses pay, asks the employer to explain his or her pay or lack of advancement opportunities, or aids or encourages another employee to pursue rights under the Act.

New Jersey Diane B. Allen Equal Pay Act

New Jersey's new equal pay law goes a step further than Washington's law. Specifically, effective July 1, 2018, the amendment to the New Jersey Law Against Discrimination makes it an unlawful employment practice for an employer to pay any employee who is a member of a class protected by the state's antidiscrimination law "at a rate of compensation, including benefits, which is less than the rate paid by the employer to employees who are not members of the protected class for substantially similar work, when viewed as a composite of skill, effort and responsibility."

An employer that violates either the Washington or the New Jersey pay equity law makes itself vulnerable to serious lawsuits and stiff penalties.

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